VZCZCXRO3912
PP RUEHCHI RUEHDT RUEHHM RUEHJO RUEHNH
DE RUEHPF #1264/01 1911130
ZNR UUUUU ZZH
P 101130Z JUL 06
FM AMEMBASSY PHNOM PENH
TO RUEHC/SECSTATE WASHDC PRIORITY 7020
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHXI/LABOR COLLECTIVE PRIORITY
RUEHGV/USMISSION GENEVA PRIORITY 1519
RUEHC/DEPT OF LABOR WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 PHNOM PENH 001264 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP, EAP/MLS, DRL/IL--MARK MITTELHAUSER, AND 
EAP/TPP/ABT THOMAS LERSTEN 
LABOR FOR ILAB--JIM SHEA AND JONA LAI 
GENEVA FOR RMA 
STATE PLEASE PASS TO USTR--BARBARA WEISEL AND DAVID BISBEE 
 
E.O. 12958: N/A 
TAGS: ELAB ECON PGOV CB
SUBJECT: CAMBODIA:  FELONY CHARGES TO BE DROPPED AGAINST 
UNION LEADERS 
 
 
¶1.  (SBU) SUMMARY:  A labor dispute threatened to erupt into 
violence on July 6 after striking workers illegally blockaded 
the main gate at the Genuine garment factory and the garment 
factory had three union leaders arrested on trumped-up felony 
charges of human confinement, the first time unionists have 
been charged with a felony since 2001.  As the dispute heated 
up, Poleconoff engaged in shuttle diplomacy, encouraging each 
side to de-escalate the conflict and reverse its illegal 
actions.  By the end of the day, the union agreed to remove 
the blockade in exchange for the factory management dropping 
the felony charges, and both sides pledged to continue 
negotiating the remaining issues with an eye towards 
resolving the strike.  This case demonstrates the extreme 
distrust between unions and factory management and factory 
owners' growing tendency to use the easily manipulated court 
system rather than the more transparent but toothless 
Arbitration Council.  END SUMMARY. 
 
Labor Dispute Escalates from Strike to Felony Charges 
--------------------------------------------- -------- 
 
¶2.  (U) On June 22, following a failed conciliation attempt 
by the Kandal provincial Department of Labor, workers from 
the Genuine garment factory went on strike to protest the 
dismissal of four factory-level union leaders in connection 
with a 2004 strike at the factory.  As the strike progressed 
without any resolution in sight, the garment workers 
blockaded the main factory gate with wooden tables and 
branches to prevent the factory from shipping out finished 
products or transporting fabric and trim to other factories 
in an effort to sub-contract the work.  A smaller door, 
through which people could walk in and out, remained 
unobstructed. 
 
¶3.  (U) The evening of July 3, three of the four union 
leaders who protested their termination were arrested; a 
fourth went into hiding.  The three union leaders were 
charged with human confinement, a felony punishable by three 
to five years in prison.  Factory management alleged that the 
blockade had trapped 25 Chinese and Taiwanese factory 
managers in the factory for several days.  (COMMENT:  While 
trumped-up misdemeanor charges against union activists are 
not uncommon, this is the first time since 2001 that union 
leaders have faced felony charges.  END COMMENT.) 
 
Embassy Urges Resolution to Dispute 
----------------------------------- 
 
¶4.  (SBU) Poleconoff, LES Labor Assistant, and FTU Vice 
President Sam Srey Mom traveled to the factory the morning of 
July 6 to check on a reported clash between workers and 
paratroopers.  Both factory manager Calvin Yeh and workers 
told Emboffs that paratroopers in civilian clothes, acting on 
orders from factory management, had started to remove the 
blockade early in the morning when there were only 20 workers 
present.  When the workers resisted, pushing and shoving 
broke out and the soldiers allegedly threatened to use 
electric batons.  (Note:  In response to a query from the 
Defense Attache, the parachute brigade commander said that 
two soldiers had gone to the factory to check on the wife of 
one of the soldiers, who was working there.  The brigade 
commander said that no other personnel from his brigade were 
at the factory.  END NOTE.) 
 
¶5.  (SBU) Factory manager Calvin Yeh told Poleconoff that the 
Chinese and Taiwanese managerial staff were able to come and 
go from the factory, but required soldier escorts to 
alleviate fears of violence from the workers.  Yeh claimed 
that the four terminated union leaders were troublemakers and 
that the factory's bottom line was that they could not 
continue to work at the factory.  Poleconoff urged the 
factory to drop the human confinement charges against the 
three union leaders, noting that the factory staff were 
clearly not confined in the factory compound and that factory 
owners often manipulated the courts to gain an advantage in 
labor disputes. 
 
¶6.  (SBU) Outside the factory, Poleconoff relayed to Sam Srey 
Mom the factory's insistence on firing the workers and opined 
that they were not likely to back down on this point. 
Moreover, the union strikes and blockading the factory gate 
 
PHNOM PENH 00001264  002 OF 003 
 
 
were illegal.  While the charges of human confinement were 
unreasonable, the union leaders were guilty of lesser crimes 
and, under Cambodian Labor Law, the factory legally had a 
right to dismiss them.  Poleconoff urged the FTU Vice 
President to compromise, but Sam Srey Mom responded that no 
compromise was possible. 
 
More Shuttle Diplomacy as Riot Police Deployed 
--------------------------------------------- - 
 
¶7.  (SBU) Later the same day, Poleconoff and Labor Assistant, 
this time accompanied by FTU federation president Chea Mony, 
returned to the garment factory after hearing that riot 
police had been deployed.  On the way to the factory, 
Poleconoff suggested that, as a way to de-escalate the 
situation, the FTU president propose removing the blockade in 
exchange for the factory dropping the human confinement 
charges against the three union leaders.  Chea Mony 
eventually agreed, saying he would be willing to remove the 
blockade unilaterally.  Upon arrival at the factory, 
Poleconoff and Labor Assistant observed a larger, angrier 
crowd of workers (now numbering about 350) and more 
police--now about 50 officers, including 10 in riot gear with 
tear gas guns as well as standard-issue sidearms. 
 
¶8.  (SBU) Talking privately to factory manager Calvin Yeh, 
Poleconoff noted that the dispute had reached a critical 
stage and that a violent confrontation might lead to injured 
workers and create bad press that would likely reach the 
factory's buyers in Europe, which could cause buyers to stop 
ordering from the factory.  Yeh responded that the factory 
was willing to consider dropping the charges against the 
three union leaders in exchange for the removal of the 
blockade.  He then agreed to negotiate directly with Chea 
Mony. 
 
I'll Trade You Three Freed Unionists for Removing One Illegal 
Blockade 
--------------------------------------------- --------------- 
 
¶9.  (SBU) Chea Mony and FTU Secretary General Mann Seng Hak 
were ushered into the factory conference room where Calvin 
Yeh, two unidentified Khmer women, Poleconoff, and Labor 
Assistant were waiting.  Poleconoff began by reminding 
everyone that the current situation benefited no one and 
could easily become violent.  Both sides had taken illegal 
actions, bore some of the responsibility, and should 
compromise in order to resolve the conflict and avoid a 
violent confrontation. 
 
¶10.  (SBU) Negotiations proceeded quickly, with one of the 
unidentified women taking the lead for the factory.  The 
female factory representative expressed her suspicions that 
Chea Mony was only here to negotiate a payoff, but Mony 
assured her that that was not the case.  The woman noted that 
the factory had already prepared paychecks for the workers 
for the upcoming payday, July 10, but planned to shut the 
factory after paying the workers, and then later re-open with 
new staff. 
 
¶11.  (SBU) Commenting that a factory closure would hurt both 
sides, Poleconoff then asked both sides to reverse their 
illegal actions, by dropping human confinement charges 
against the three union leaders and removing the blockade. 
First the factory representative and then Chea Mony agreed to 
the idea in principle, though the factory representative 
insisted that the union leaders be left in jail for 30 days 
to "educate" them.  Chea Mony responded that this was 
unreasonable and that they should be released on July 10 
instead.  The factory representative agreed, and she and Chea 
Mony swapped cell phone numbers, agreeing to keep talking and 
setting a goal of resolving the dispute by July 10. 
 
Blockade Removed; Union and Factory Thank Embassy 
--------------------------------------------- ---- 
 
¶12.  (SBU) Calvin Yeh, the two Khmer women, the FTU 
representatives, and Poleconoff and Labor Assistant walked 
out of the factory together to the applause of workers, who 
immediately began dismantling the barricade on orders from 
Chea Mony.  The unidentified woman finally introduced herself 
 
PHNOM PENH 00001264  003 OF 003 
 
 
as Okhna Sheang Chanheng, Director of Heng Development 
Company.  (NOTE:  Okhna is a Cambodian honorific, denoting 
people who have contributed USD 100,000 or more to the ruling 
CPP.  END NOTE.)  She was effusive in her thanks to the 
Embassy for resolving the dispute, noting that even the 
anti-riot police were unable to remove the barricade. 
 
¶13.  (SBU) Speaking over a loud speaker, Chea Mony praised 
the workers for their courage, told them that they would be 
paid on July 10, and asked them to trust his decision to 
remove the blockade, saying that he felt the strike could be 
ended soon.  He did not mention the promised release of the 
union leaders.  In the car on the way back to Phnom Penh, he 
thanked the embassy for its assistance, noting that the 
embassy had helped to resolve seemingly intractable labor 
disputes twice in one week. 
 
¶14.  (SBU) COMMENT.  While the felony charges made this 
dispute more serious than other garment sector labor 
disputes, this case highlights many factors common to strikes 
across the industry.  Lack of communication and extreme 
distrust between unions and factories, combined with 
ineffective government attempts at conciliation, mean that 
disputes often escalate to strikes before serious 
negotiations are held.  Unions are increasingly disappointed 
by the Arbitration Council, which offers fair but 
unenforceable rulings and is more and more often being 
trumped by the easily manipulated court system.  (Indeed, it 
was rather remarkable to watch as the FTU president and the 
factory owner negotiated how long the three union leaders 
would stay in jail, with no one doubting that the factory 
owner had the power to order their release whenever she 
wished.)  The situation is clearly driving unions and garment 
factories to seek other solutions--such as the garment 
sector-wide collective bargaining effort set to begin in 
August--but it also means that negotiations start from a 
position of intense distrust and suspicion.  END COMMENT. 
MUSSOMELI